From Hope to Nope

After spending part of the week trying to believe that the war with Iran might be moving toward some contained conclusion, investors woke up to a harsher reality: Trump's speech yesterday did not calm anyone down, far from it. Instead of hope and resolution, the market got escalation without a timetable. By Thursday morning, stock futures were falling, oil was surging, with WTI reaching a whopping $110.

Bloomberg put the mood plainly: "Trump's speech is doing little to reassure traders after he pledged more aggressive actions in Iran. Ahead of a long weekend, investors are unlikely to add to risk positions." By early morning in New York, S&P 500 futures were down about 1.5%, with Nasdaq 100 contracts off roughly 2%. Dow futures were down sharply too. Tech stocks were under pressure, with names such as Apple, Nvidia, and Tesla weighing on index futures. Small-cap stocks were also falling, and Europe and Asia were weaker.

Yesterday, Trump once again talked about getting out of Iran quickly, but he also threatened more aggressive action and signaled that military pressure could intensify in the coming weeks. The biggest reaction today is in oil, because oil is where war becomes economics. Analysts have turned more openly nervous. Societe Generale now expects Brent to average $125 this month, with possible spikes toward $150. ING warned that even if shipping through the Strait of Hormuz resumes, a return to normal would be slow because production, logistics, and inventories do not magically reset themselves overnight.

Today is the last U.S. trading session before Good Friday, and while Wall Street will be shut tomorrow, the March jobs report will still be released. Bloomberg Economics expects payroll growth of 80,000, shaped by a rebound from strike-related distortions, weak private hiring, and continuing drag from federal payrolls. So investors face a nasty little combination: geopolitical risk they cannot measure, economic data they cannot trade immediately, and a weekend during which the news cycle will not politely observe market hours. No wonder people are trimming risk.

There is, to be fair, a case for saying the U.S. is better placed than many countries to absorb an oil shock. The United States is a net exporter of light, sweet crude, geopolitical risk is less damaging for U.S.-focused energy producers than for many international peers, and that WTI-driven inflation could prove temporary. Moody's Analytics makes a related but more sobering point: the U.S. is not going to run out of oil, but it is not insulated from higher costs either. This is visible in the WTI jumping 11% today to even surpass Brent.

If anything, Trump's speech yesterday underscored that gap. He was trying to sell Americans on the war and present the costs as manageable, even short-lived. He was also trying to reassert control over a narrative that had begun slipping away as the conflict dragged on. Politically, that may make sense. Financially, it landed with a thud. Investors heard not a plan for de-escalation, but a promise of more volatility.

Energy stocks are among the few obvious beneficiaries, with Exxon, Chevron, and Occidental moving higher as oil climbs. Globalstar is surging on reports that Amazon is in talks to buy the satellite company, potentially helping Amazon build out a low-orbit network to compete with Starlink. Space-related stocks are also drawing interest after SpaceX confidentially filed for an IPO that could become one of the largest ever.

There are other sources of pressure as well. The Trump administration is reportedly close to announcing tariffs on drugmakers that have not agreed to low U.S. prices, while also preparing a tiered steel and aluminum tariff regime meant to simplify a process that has frustrated companies for months. 

This column is taking a short break for the Easter weekend and will return on Tuesday. Have a wonderful weekend in the meantime.

Today's economic highlights:

On today's agenda: the balance of trade in Australia; the year-on-year inflation rate in Switzerland; the month-on-month retail sales in Italy; in the United States, initial jobless claims, exports, balance of trade, imports, and the goods trade balance advance; the balance of trade in Canada; Fed Logan's speech in the United States. See the full calendar here.

• Dollar index: 100.131
• Gold: $4,602
• Crude Oil (BRENT): $109.59 (WTI) $109.12
• United States 10 years: 4.36%
• BITCOIN: $66,198

In corporate news:

• Amazon Web Services and Reply signed a partnership to speed up adoption of cloud and AI solutions in selected international markets, including offerings tied to digital sovereignty and the AWS European sovereign cloud.
• Berkshire Hathaway hired Mizuho Securities and BofA Securities for a potential benchmark yen bond offering, according to Bloomberg.
• ActiveOps agreed to sell its WorkiQ trademarks in several major markets to Microsoft for $10 million in cash.
• Apollo Global Management sold Sapphire Gas Solutions to Antin Infrastructure Partners, with Sapphire's management team staying in place.
• Intel plans to invest an additional $15 million in SambaNova, which would raise its stake to about 9%, pending regulatory approval.
• JD.com priced 10 billion yuan of senior unsecured notes due 2031 and 2036, with proceeds intended for general corporate purposes including debt servicing.
• IBM and Arm formed a strategic partnership to develop enterprise computing hardware better suited for future AI and data-intensive workloads.
• ThroughLine, a crisis-support contractor for OpenAI, Anthropic and Google, is developing a tool aimed at redirecting users showing signs of violent extremism toward human and chatbot-based support.
• Singapore charged another individual in a fraud case linked to AI servers supplied by Dell Technologies, in a matter connected to concerns over Nvidia chip shipments.
• Pfizer and BioNTech halted a US trial of their updated COVID-19 vaccine for adults aged 50 to 64 because enrollment was too weak to produce meaningful data.
• Eli Lilly received US FDA approval for Foundayo (orforglipron), its weight-loss treatment for adults with obesity or overweight-related health conditions.
• Avolta has secured a contract at Jacksonville Airport in the United States.
• Amazon is in talks to acquire the satellite group Globalstar in order to compete with Elon Musk's Starlink, according to the FT.
• General Motors saw a 10% drop in US sales in the first quarter.
• KKR is limiting buybacks within its unlisted private credit fund for retail investors, according to Bloomberg.
• Biogen has launched a $5.6 billion bid for Apellis Pharma.
• Gilead has extended its takeover bid for Arcellx.

Analyst Recommendations:

• Expand Energy Corporation: KeyBanc Capital Markets downgrades to sector weight from overweight.
• Wingstop Inc.: Raymond James upgrades to strong buy from outperform but reduces the target price from USD 325 to USD 240. 
• Alaska Air Group, Inc.: Susquehanna maintains its positive recommendation and reduces the target price from USD 70 to USD 55.
• Aptiv Plc: Baird maintains its outperform recommendation and reduces the target price from USD 105 to USD 74.
• Darling Ingredients Inc.: UBS maintains its buy recommendation and raises the target price from USD 58 to USD 78.
• Marathon Petroleum Corporation: TD Cowen maintains its buy recommendation and raises the target price from USD 198 to USD 299.
• Mongodb, Inc.: SinoPac Securities maintains its buy recommendation and reduces the target price from USD 420 to USD 326.
• Servicenow, Inc.: Stifel maintains its buy recommendation and reduces the target price from USD 180 to USD 135.
• Southwest Airlines Co.: Susquehanna maintains its neutral recommendation and reduces the target price from USD 55 to USD 42.
• Valero Energy Corporation: TD Cowen maintains its hold recommendation and raises the target price from USD 170 to USD 247.